MPS

MPS Limited reported a 'challenging 'holding quarter'' in Q3 FY26, with revenue dipping to INR 182.5 crores. Despite this, the company maintained a healthy EBITDA margin of 31.6%. For the first nine months of FY26, revenue grew to INR 563.2 crores. Management initiated an 'Andon Cord' project for radical cost optimization, aiming to expand margins and strengthen the balance sheet, indicating a disciplined reset to prepare for future growth.

The company announced the acquisition of 100% stake in Unbound Medicine for USD 16.5 million. This acquisition is described as a 'transformative milestone,' moving MPS directly into the medical and nursing ecosystems. Unbound operates on a high-margin, subscription-led B2B model, primarily serving medical and nursing schools in the U.S. and Canada, with strong institutional stickiness and a 97% retention rate across 480 institutions.

The Research Solutions segment continued to be a stable anchor, contributing approximately 61.1% of the total revenue in 9M FY26. The segment achieved an impressive 16.2% year-on-year organic revenue growth, excluding AJE. Strategic focus includes transitioning to AI-powered workflows, prioritizing AI models, and scaling DigiCorePro to drive sustained profitability and operational excellence. Management expects the rapid decline in AJE revenue to stall, with FY27 projected as a stable revenue year for AJE, driven by B2B partnerships and expanded services.

Education Solutions emerged as a standout performer, growing over 38% in the first nine months of FY26. In Q3, the segment's revenue grew by 11.3% year-on-year, and its EBITDA margin expanded to 40.8%. The business is building on momentum with major K-12 and Higher Education customers, converting pilots into product development and international projects. The digital and accessibility arm delivered excellent growth, handling complex work and expanding new service lines like LMS and web accessibility.

The Corporate Learning business experienced a 'significant pullback' in Q3 FY26, with MPSi Liberate and MPS Europa operating below prior year's budget revenue levels. This segment is undergoing a strategic realignment, moving away from low-margin legacy work and consolidating operations across entities (Switzerland, India, Australia). The focus is shifting towards higher-value capabilities, AI-enabled solutions, immersive training projects (VR, AR), and managed learning services, with early signs of success emerging.

Management views AI as a significant opportunity, not a threat, for MPS. They emphasize that AI transformation requires execution across the entire value chain, which MPS is uniquely positioned to provide due to its domain expertise and ability to service end-to-end client needs. While the B2C portion of AJE might see some impact, the B2B segment is leveraging AI for efficiency and speed. For Unbound Medicine, AI is integrated to supercharge data but does not disrupt its core value proposition, which relies on verified, peer-reviewed clinical guides.

Despite the Q3 challenges, management expressed high confidence, stating MPS is 'comfortably placed to surpass an EPS of INR 100 in FY'26,' which they consider a conservative estimate. They anticipate a 'better quarter' in Q4 FY26 and project FY27 to be an 'exceptional year' with Education Solutions growing in double digits and Corporate Learning returning to growth. However, they noted a negative impact of INR 3.5 per share on EPS due to new Labour Code related adjustments.